As the health care industry continues to
grow at an explosive rate, the federal
government continues to add new regulations and change existing ones to
keep up.
Many of the changes made by the government aren’t noticeable by the general public
unless they directly affect the health care
service received by patients. However, the
government has enacted many of these regulations in an effort to prevent fraud and
abuse in the health care system.
“I don’t believe that the public is aware of
the complexity of these regulations and
how they affect the business relationships
between health care providers,” says Kathy
Butler, manager of the Health Law Practice
Group at Greensfelder, Hemker & Gale, P.C.
“I think they hear on a broader scale of the
government’s numbers about how many billions of dollars it is collecting from people
erroneously billing or committing fraud.”
Smart Business spoke to Butler about
how often regulations change and how they
affect the health care industry.
Do regulations change a lot in the health care
industry?
Yes, they do. The Centers for Medicare
and Medicaid Services regulate all the different types of service providers. These
services include hospitals, physicians,
diagnostic testing facilities, medical device
suppliers, etc. There are various times
throughout the year, on a fairly constant
basis, when changes are being made.
Typically, any changes made to the
Medicare physician fee schedule come out
in the summer and are finalized by Nov. 1;
we just finished up this process for the
year. There are also rules for hospitals that
change every year related to the inpatient
services and for outpatient services that
come out at a different times. The government can publish regulation changes at any
time it feels there is a need.
In the last couple of years, there have
been significant and sometimes complex
changes that have had a huge effect on
physician-hospital relationships and medical provider business structures. It is a
constant education and effort to keep up
with all the changes.
Are these changes necessary to keep up with
the ever-growing health care industry?
The government believes, and rightly so
in some cases, that some providers are
billing inappropriately or engaging in
fraudulent activity at the government’s
expense. It is a complicated system and
there is a lot of money involved in delivering health care services. Although most
providers try very hard to comply with all
the rules, whenever you have complexity
some people will try to defraud the system
to make money.
For example, in South Florida, the government is dealing with providers of various types of services, such as infusion clinics and medical equipment, which are
under scrutiny because some providers are
billing for services they have not provided
or that are not medically necessary. It’s a
complicated regulatory scheme and people
take advantage of it, so the government has
created regulations in an effort to minimize
fraud and abuse.
As a result, the government applies its
regulations with a broad brush, and sometimes those regulations frustrate legitimate
business activities that may actually be beneficial and create efficiencies for
patients, the community and the industry.
Can you give an example?
One of the most recent changes involves
a rule change that allows hospitals to contract with other entities to provide services
that the hospital doesn’t have, and then bill
for the services ‘under arrangement.’ The
hospital bills as if the service was provided
by it and then pays the entity that performed the service a fair market value rate.
But, due to concerns about financial relationships between hospitals and physicians, a new regulation, due to go into
effect in October 2009, will prohibit that
type of arrangement between a hospital
and any entity that has physician owners
that refer to the entity.
The government is concerned that hospitals inappropriately allow physicians to
benefit financially by contracting with
physician-owned companies. A small hospital with limited resources that contracted
for MRI services with a physician group
that already had an MRI may have to spend
money to buy its own MRI and duplicate a
service that already exists in the community. The hospital will then have less money
to spend on other services that may be
needed in the community.
What is the Stark Law?
It is a federal strict liability law that prohibits a physician from making a referral to
certain types of entities (including hospitals), and prevents the entity for billing for
that referral, if the physician has a financial
relationship with the entity, unless the relationship fits within a specific exception.
For example, if a hospital contracts with a
physician for administrative services, that
physician, if he or she also refers patients to
the hospital, must have a written contract
that meets very specific standards. Failure
to meet each standard, even if it is inadvertent, could result in the providers having to
return the payment for the services they
provided, and other severe penalties.
KATHY BUTLER is manager of the Health Law Practice Group at Greensfelder, Hemker & Gale, P.C. Reach her at (314) 516-2661 or
[email protected].
